4 Building blocks for procurement utopia
So, it looks like your company’s buying processes are under control; maverick staff spend is low, three-way match rules are being followed and supplier costs and terms have been carefully negotiated. However, there are more ways of extending your procurement best practice processes by investing more into upstream areas. The business benefits of optimised upstream procurement are there for the taking in these 4 key areas.
Spend Analysis
Successful spend strategies are based on structured processes, good data and insightful analytics. The challenge here however, is trying to understand and analyse large amounts of data coming in different formats and languages; making this task very complex and difficult. Spend analysis systems can provide an effective and efficient process by helping to identify product and service rationalisation opportunities; optimise the supply base; identify and remove duplicate payments.
Electronic sourcing, tendering & auctions
Electronic sourcing enables businesses to simplify even the most complex supplier processes such as Requests for Information (RFIs) through a single comparable online format. This allows key stakeholders to evaluate submissions easily and quickly, giving them all of the information to make well-informed supply chain decisions.
eTendering can help organisations to reduce up to 85% of time when compared to manual tendering processes. This enables the procurement team to increase the number of tenders they deal with each year. eAuctions allow buyers to create and run auctions for simple as well as complex spend categories and secure the best possible value from the supply chain; helping to significantly increase savings for the whole business.
Contract Management
Electronic contract management allows procurement professionals to store all of their supplier contracts in one central location and decrease the searching time with power search capabilities. Additionally, it helps to ensure they do not miss any contract milestones through available automated alerts. Without the right tools in place to effectively monitor and manage contracts your business is always in danger of supplier terms simply rolling over from one year to the next.
Supplier Management
Closely managed supplier relationships and information can benefit everyone, yet a lot of companies have a supply base that is too large, insufficiently monitored and managed.
Decreasing supply chain risk with supplier relationship management (SRM) is extremely important even though it might be difficult to express clear ROI to other key stakeholders. Being able to avoid major supply chain failure will not add to the company’s bottom line, but it can help protect the impact of costly oversight. SRM can help to build trust, understanding and openness between buyers and suppliers, often leading to important paybacks such as supplier investment and suppliers going beyond stated contact terms and coming up with new, innovative ideas.
Supplier Information Management offers self-service supplier on-boarding and data maintenance, supported by automated milestone and alert management.
The whole package?
It might be difficult to decide which of the above should be adopted first, but have you ever wondered if you can get it all at once? The answer is yes, the ROI for integrated procurement software is very persuasive and drives significant returns in process efficiencies, risk reduction, audit, visibility and finally cost savings. Is your organisation ready to take the next step?
